Earnings Release • Feb 26, 2016
Earnings Release
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Paris, February 26, 2016
Results
Elior Group (Euronext Paris – ISIN: FR 0011950732), one of the world's leading operators in the catering and services industry, today released its consolidated results for first-quarter 2015-2016, corresponding to the three months ended December 31, 2015.
Commenting on these results, Philippe Salle, the Group's Chairman and Chief Executive Officer, stated: "During the first quarter of this new fiscal year Elior Group has made significant progress in the execution of its strategy. We have actively pursued our development in contract catering in the USA with the acquisition of ABL Management. We have continued implementing the Tsubaki transformation plan, notably on the front of the activities and contracts portfolio review project. It implies the full review of our contracts and activities and will result in the termination or the disposal of those which are assessed as not profitable enough. Excluding that impact which amounted to (2.1)%, organic growth reached 3.1% despite a more difficult than anticipated operating environment due to the terrorist attacks that struck Paris on November 13, 2015. EBITDA margin rate increased by 20 basis points year on year, demonstrating how we have effectively implemented our action plans. Overall, we are confident that our businesses will continue their dynamic momentum and thanks to the solid first quarter performance we are standing by our financial objectives for the full fiscal year."
| (in € millions ) | Q1 2015-2016 | Q1 2014-2015 | Year-on-year change |
|---|---|---|---|
| Revenue | 1,483 | 1,420 | + 4.5% |
| EBITDA | 114 | 106 | + 6.9% |
| As a % of revenue | 7.7% | 7.5% | +0.2 pt |
| Attributable net profit for the period |
28 | 20 | + 40.6% |
Business development was strong in the first quarter of FY 2015-2016, although the retention rate for contract catering & services was negatively affected by the Group's deliberate strategy of taking a more selective approach to renewals of contracts, particularly in France and Italy. A number of major contracts were won during the period. For contract catering & services, these included contracts with Accor, Airbus, the Le Raincy municipality and Galeries Lafayette in France, the Geriatros senior living communities in Spain, the Verbania municipality in Italy, and BG Group plc in the United Kingdom. For concession catering, Areas won a very significant contract with SNCF Gares & Connexions for the management of 14 points of sales in Gare du Nord in Paris and 20 points of sales in major regional railway stations for a total revenue amount of €700 million over 10 years.
Consolidated revenue totaled €1,483 million for the first quarter of FY 2015-2016. The 4.5% year-on-year increase reflects (i) organic growth of 1.0% (taking into account the 2.1% negative effect of voluntary contract exits), and (ii) positive impacts of 1.5% and 1.9% respectively from acquisition-led growth and changes in exchange rates.
The portion of revenue generated by international operations rose to 51% in the first quarter of FY 2015-2016 from 49% in the comparable prior-year period.
Contract catering & services revenue was up €53 million, or 5.1%, year on year, coming in at €1,096 million and accounting for 74% of total consolidated revenue.
Organic growth was 0.2%, reflecting the adverse effect of the Group's strategy of withdrawing from low- and non-profit-making contracts in all of its European host countries.
The recent acquisitions carried out in the United States1 had a €30 million positive impact during the first three months of FY 2015-2016, and net of the impact of the sale of nonstrategic operations in the education market, changes in the scope of consolidation pushed up contract catering & services revenue by an overall 2.9%.
In France, voluntary contract exits carried out during the period had a direct impact on all markets but this geographic segment nevertheless reported 1.0% organic growth, with revenue reaching €561 million.
Revenue for the International segment climbed 9.8% to €535 million. Organic growth for this segment was a negative 0.9%, however, mainly due to voluntary contract exits in Italy, the United Kingdom and Spain. In addition, organic growth in the United States was hampered by an unfavorable calendar effect (which trimmed an estimated \$5 million off
1 Starr Restaurant Catering Group and Cura Hospitality have been consolidated since October 1, 2015, and ABL Management has been consolidated since December 1, 2015.
revenue for the period), as well as by a lower retention rate than the historic average in early 2015, which resulted in sales teams being strengthened during the second half of 2015. Meanwhile, the Group's recent acquisitions in the United States and positive currency effects generated additional growth of 6.2% and 4.6% respectively.
Concession catering revenue rose 2.7% in the first three months of FY 2015-2016 to €387 million, representing 26% of total consolidated revenue.
Organic growth for the period came to 3.4%. Changes in the scope of consolidation had a 2.2% adverse impact on revenue, reflecting both completed and planned sales of nonstrategic assets resulting from the Group's review of its business portfolio. Changes in exchange rates – notably for the US dollar – had a 1.4% positive effect.
Revenue generated in France amounted to €162 million, down 3.8% year on year. The terrorist attacks in Paris in November 2015 had an estimated €5 million negative effect on revenue during the period.
In the International segment, 7.9% growth drove revenue up to €225 million. Organic growth was 9.2%, but completed or planned sales of non-strategic assets shaved 3.9% off the revenue figure.
Consolidated EBITDA climbed by €7 million to €114 million and represented 7.7% of revenue, up 20 basis points on the first quarter of FY 2014-2015.
EBITDA for the contract catering & services business line rose to €90 million from €86 million, but its EBITDA margin edged down to 8.2% from 8.3% in the first quarter of FY 2014-2015.
Concession catering EBITDA amounted to €26 million (versus €22 million in the same period of FY 2014-2015) and represented 6.7% of revenue, up 80 basis points year on year.
Non-recurring items represented a net charge of €13 million, breaking down as (i) €10 million in non-recurring operating charges such as restructuring costs recorded in France, Italy, Spain and the United States and disposal losses on sales of non-strategic assets and closures of non-profit making sites, and (ii) €3 million in amortization of goodwill recognized on acquisitions.
At €14 million, net financial expense was considerably lower than in the first three months of FY 2014-2015, reflecting (i) the debt refinancing carried out in December 2014 and May 2015, (ii) the better financial conditions obtained for the Group's euro-denominated senior debt in December 2015, and (iii) lower interest rates.
The Group's income tax expense rose to €19 million from €14 million. The year-on-year increase reflects a higher level of taxable profit as the applicable tax rate was stable at around 40%.
Attributable net profit for the period was up sharply, amounting to €28 million versus €20 million in first-quarter FY 2014-2015. This drove a year-on-year increase in adjusted earnings per share2 to €0.21 from €0.12.
Free cash flow3 came to a negative €65 million in the first three months of FY 2015-2016. This represented a €13 million improvement on the comparable prior-year period, achieved thanks to the increase in EBITDA as well as the Group's tight control of seasonal working capital requirement and capital expenditure. Free cash flow was, however, adversely affected during first-quarter FY 2015-2016 by €19 million in non-recurring items (versus €32 million in the first three months of FY 2014-2015) as well as the payment of nonrecurring income tax.
Net debt amounted to €1,613 million at December 31, 2015, up €161 million on the September 30, 2015 figure, mainly as a result of seasonal effects on working capital requirement and the acquisitions carried out during the period in the United States and France (Cura Hospitality, ABL Management and Ducasse Développement) for an aggregate €57 million. The Group's leverage ratio4 stood at 3.30x EBITDA at December 31, 2015, compared with 3.38x one year earlier.
2 Adjusted for non-recurring operating items net of the tax effect calculated at the standard rate of 34%
3 Defined as EBITDA + change in WCR - net capex - cash impact of tax - non-recurring cash items
4 Calculated in accordance with the definition in the SFA: Consolidated net debt/Pro forma EBITDA adjusted for acquisitions and divestments carried out in the past twelve months
As part of its strategic plan for 2016-2020, the Group has embarked on its transformation process with a view to accelerating its development, and fiscal 2015-2016 should see the initial benefits of this new momentum. Thanks to our solid performance in the first quarter of 2015-2016 we are standing by our objectives for the full fiscal year, namely:
Given the ongoing discussions with potential acquisition targets in contract catering in the USA, the Group expects to close new transactions in the coming months in the framework of its 2020 strategic plan.
On February 9, 2016, Elior redeemed in advance of term 22% of the outstanding Elior Finance SCA 6.5% May 2020 Senior Secured Notes. This redemption represented a nominal amount of €50 million and the corresponding cash outflow for Elior was €54 million, including €3 million in early redemption penalties. The repayment was financed by way of Elior SA drawing down €50 million under a new syndicated bank loan set up on January 29, 2016, which expires in January 2023. Interest on the new loan is based on the Euribor plus a standard margin of 2.5%.
5 Excluding the impact of changes in scope of consolidation and the currency effect
6 Adjusted for non-recurring operating items net of the tax effect calculated at the standard rate of 34%
A press conference will be held on Friday, February 26, 2016 at 9.00 a.m. (CET), which will also be accessible by webcast on the Elior Group website and by phone by dialing one of the following numbers:
France: + 33 1 76 77 22 21
United Kingdom: + 44 20 3427 1907
United States: + 1 646 254 3365
Financial calendar:
Appendix 1: Revenue by business line and geographic region Appendix 2: Revenue by geographic region Appendix 3: Revenue by market Appendix 4: EBITDA by business line and geographic region Appendix 5: EBIT by business line and geographic region Appendix 6: Simplified cash flow statement Appendix 7: Consolidated financial statements
The English-language version of this document is a free translation from the original, which was prepared in French. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions expressed therein, the original language version of the document in French takes precedence over this translation
Financial statements included in this press release have not been audited by the Group's statutory auditors.
About Elior Group
Founded in 1991, Elior Group has grown into one of the world's leading operators in the catering and related services industry, and is now a benchmark player in the business & industry, education, healthcare, and travel markets.
In FY 2014-2015, it generated €5,674 million in revenue through 18,600 restaurants and points of sale in 13 countries. Our 108,000 employees serve 4 million customers on a daily basis, taking genuine care of each and every one by providing personalized catering and service solutions to ensure an innovative customer experience
We place particular importance on corporate social responsibility and have been a member of the United Nations Global Compact since 2004. The professional excellence of our teams, as well as their unwavering commitment to quality and innovation and to providing best-in-class service is embodied in our corporate motto: "Time savored".
For further information please visit our website (http://www.eliorgroup.com) or follow us on Twitter (@Elior\_Group / @Elior\_France).
Anna Adlewska / Caroline Guilhaume – [email protected] / [email protected] +33 (0)1 47 03 68 10
| Q1 2015- 2016 |
Q1 2014-2015 |
Organic growth (1) |
Changes in scope of consolidation |
Currency effect |
Total growth |
|
|---|---|---|---|---|---|---|
| (in € millions) | ||||||
| France | 561 | 555 | 1.0% | 0.0% | 0.0% | 1.0% |
| International | 535 | 487 | -0.9% | 6.2% | 4.6% | 9.8% |
| Contract catering & services | 1,096 | 1,043 | 0.2% | 2.9% | 2.1% | 5.1% |
| France | 162 | 168 | -3.8% | 0.0% | 0.0% | -3.8% |
| International | 225 | 209 | 9.2% | -3.9% | 2.6% | 7.9% |
| Concession catering | 387 | 377 | 3.4% | -2.2% | 1.4% | 2.7% |
| GROUP TOTAL | 1,483 | 1 420 | 1.0% | 1.5% | 1.9% | 4.5% |
| (in € millions) | Q1 2015- 2016 |
Q1 2014- 2015 |
Organic growth (1) |
Changes in scope of consolidation |
Currency effect |
Total growth |
|---|---|---|---|---|---|---|
| France | 723 | 724 | -0.1% | 0.0% | 0.0% | -0.1% |
| Other European countries | 543 | 530 | 1.9% | -0.9% | 1.6% | 2.6% |
| Rest of the world | 217 | 167 | 3.0% | 16.0% | 11.4% | 30.4% |
| GROUP TOTAL | 1,483 | 1,420 | 1.0% | 1.5% | 1.9% | 4.5% |
| (in € millions) | Q1 2015- 2016 |
Q1 2014- 2015 |
Organic growth (1) |
Changes in scope of consolidation |
Currency effect |
Total growth |
|---|---|---|---|---|---|---|
| Business & industry | 500 | 474 | -0.3% | 3.9% | 2.0% | 5.6% |
| Education | 307 | 305 | -1.1% | 0.2% | 1.5% | 0.7% |
| Healthcare | 288 | 264 | 2.3% | 4.1% | 2.9% | 9.3% |
| Contract catering & services | 1,096 | 1,043 | 0.2% | 2.9% | 2.1% | 5.1% |
| Motorways | 132 | 131 | 1.1% | -1.7% | 1.8% | 1.3% |
| Airports | 165 | 151 | 8.6% | -1.6% | 2.3% | 9.2% |
| City sites & leisure | 90 | 96 | -1.7% | -3.7% | -0.3% | -5.7% |
| Concession catering | 387 | 377 | 3.4% | -2.2% | 1.4% | 2.7% |
| GROUP TOTAL | 1,483 | 1,420 | 1.0% | 1.5% | 1.9% | 4.5% |
| (En millions d'euros) | Q1 2015-2016 |
Q1 2014-2015 |
Y-o-y change (€m) |
Y-o-y change (%) |
|---|---|---|---|---|
| France | 50 | 49 | 1 | 2.2% |
| International | 40 | 37 | 2 | 6.6% |
| Contract catering & services | 90 | 86 | 4 | 4.1% |
| France | 11 | 14 | (3) | -22.6% |
| International | 15 | 8 | 7 | 83.5% |
| Concession catering | 26 | 22 | 4 | 15.8% |
| Corporate | (2) | (2) | 0 | ns |
| GROUP TOTAL | 114 | 106 | 7 | 6.9% |
| (in € millions) | Q1 2015-2016 |
Q1 2014-2015 |
Y-o-y change (€m) |
Y-o-y change (%) |
|---|---|---|---|---|
| France | 41 | 39 | 2 | 4.1% |
| International | 31 | 28 | 2 | 8.6% |
| Contract catering & services | 71 | 67 | 4 | 6.0% |
| France | 2 | 5 | (3) | -54.2% |
| International | 3 | (2) | 6 | ns |
| Concession catering | 6 | 3 | 3 | 114.5% |
| Corporate | (2) | (3) | 0 | ns |
| GROUP TOTAL | 75 | 67 | 7 | 11.0% |
| (In € million) | Q1 2015-2016 |
Q1 2014-2015 |
y-o-y change (€m) |
|---|---|---|---|
| EBITDA | 114 | 106 | 8 |
| Change in working capital requirement | -90 | -90 | 0 |
| Net capex | -40 | -56 | 16 |
| Cash tax | -29 | -6 | -23 |
| Non-recurring cash items | -19 | -32 | 13 |
| Free cash flow | -65 | -78 | 13 |
| (in € millions) | Q1 2015- 2016 |
Q1 2014- 2015 |
|---|---|---|
| Revenue | 1,483 | 1,420 |
| Purchases of raw materials and consumables | (464) | (440) |
| Personnel costs | (674) | (649) |
| Other operating expenses | (219) | (211) |
| Taxes other than on income | (13) | (14) |
| Depreciation, amortization and provisions for recurring operating items | (39) | (39) |
| Recurring operating profit | 74 | 67 |
| Share of profit of equity-accounted investees | 0 | 0 |
| Recurring operating profit including share of profit of equity-accounted investees | 75 | 67 |
| Other income and expenses, net | (13) | (2) |
| Operating profit including share of profit of equity-accounted investees | 61 | 66 |
| Net financial expense | (14) | (32) |
| Profit before income tax | 47 | 34 |
| Income tax | (19) | (14) |
| Profit/(loss) for the period from discontinued operations | 0 | |
| Profit for the period | 28 | 20 |
| Attributable to owners of the parent | 28 | 20 |
| Attributable to non-controlling interests | 0 | 0 |
| Earnings per share (in €) | 0.16 | 0.12 |
| (in € millions) | At Dec. 31, 2015 |
At Dec. 31, 2014 |
|---|---|---|
| Goodwill | 2,431 | 2,385 |
| Intangible assets | 317 | 272 |
| Property, plant and equipment | 504 | 500 |
| Non-current financial assets | 38 | 32 |
| Equity-accounted investees | 3 | 2 |
| Fair value of derivative financial instruments | - | - |
| Deferred tax assets | 217 | 245 |
| Total non-current assets | 3,510 | 3,437 |
| Inventories | 104 | 97 |
| Trade and other receivables | 960 | 973 |
| Current income tax assets | 31 | 22 |
| Other current assets | 56 | 51 |
| Short-term financial receivables | 9 | 7 |
| Cash and cash equivalents | 180 | 154 |
| Assets classified as held for sale | 6 | |
| Total current assets | 1,346 | 1,303 |
| Total assets | 4,856 | 4,740 |
| (in € millions) | At Dec. 31, 2015 |
At Dec. 31, 2014 |
|---|---|---|
| Share capital | 2 | 2 |
| Reserves and retained earnings | 1,482 | 1,298 |
| Non-controlling interests | 39 | 46 |
| Total equity | 1,523 | 1,346 |
| Long-term debt | 1,666 | 1,565 |
| Fair value of derivative financial instruments | 8 | 22 |
| Non-current liabilities relating to share acquisitions | 20 | 182 |
| Deferred tax liabilities | 50 | 49 |
| Provisions for pension and other post-employment benefit obligations |
105 | 105 |
| Other long-term provisions | 23 | 15 |
| Total non-current liabilities | 1,872 | 1,938 |
| Trade and other payables | 655 | 641 |
| Due to suppliers of non-current assets | 16 | 15 |
| Accrued taxes and payroll costs | 560 | 550 |
| Current income tax liabilities | 26 | 44 |
| Short-term debt | 118 | 99 |
| Current liabilities relating to share acquisitions | 11 | 10 |
| Short-term provisions | 56 | 77 |
| Other current liabilities | 17 | 20 |
| Liabilities classified as held for sale | 2 | - |
| Total current liabilities | 1,461 | 1,456 |
| Total liabilities | 3,333 | 3,394 |
| Total equity and liabilities | 4,856 | 4,740 |
| (in € millions) | Q1 2015- 2016 |
Q1 2014-2015 |
|---|---|---|
| Cash flows from operating activities | ||
| EBITDA | 114 | 106 |
| Change in working capital | (90) | (90) |
| Interest paid | (28) | (22) |
| Tax paid | (29) | (6) |
| Other cash movements | (19) | (32) |
| Net cash used in operating activities | (53) | (44) |
| Cash flows from investing activities | ||
| Purchases of and proceeds from sale of property, plant and equipment and intangible assets |
(40) | (55) |
| Purchases of and proceeds from sale of non-current financial assets | (7) | 0 |
| Acquisition/sale of shares in consolidated companies | (50) | (18) |
| Net cash used in investing activities | (98) | (74) |
| Cash flows from financing activities | ||
| Dividends paid to owners of the parent | - | - |
| Movements in share capital of the parent | 0 | 0 |
| Purchases of treasury shares | - | - |
| Dividends paid to non-controlling interests | (1) | (1) |
| Proceeds from borrowings | 132 | 1,048 |
| Repayments of borrowings | (41) | (960) |
| Net cash from financing activities | 90 | 88 |
| Effect of exchange rate and other changes | (1) | (22) |
| Net decrease in cash and cash equivalents | (62) | (52) |
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